Hanwha Solar Q2 2014 Results

Hanwha Solar (HSOL) is a vertically integrated solar company in China. HSOL had a production capacity of 800 MW for ingot and wafer, 1.3 GW for cell and 1.5 GW for modules, as on June 30, 2014. The company gave a decent set of Q2 2014 results. The shipments went up by 4.9% and the net losses also reduced from $ 21.5 million in Q1 2014 to $ 8.8 million in Q2 2014. Revenues showed a quarterly decline by 2.7% in the second quarter at $ 178.5 million.

Mr. Seong-woo Nam, Chairman and CEO of Hanwha SolarOne commented, “The second quarter of 2014 showed an increase in shipments and a significant reduction in our net loss position. Our gross margins were driven down by a lower average selling price, reflecting a decreasing proportion of sales from the higher-priced EU market, particularly the UK, and an increasing proportion from the relatively lower priced China market. We maintained our strong position in Japan and began shipments to several newer emerging markets. We continued to maintain tight control over operating expenses.”

Source: Hanwha Solar

The company remains positive about the rest of the year too and expects module shipments of approximately 400 MW in Q3 2014. Also the company is looking forward to expand its cell and module capacities to at least 1.5 GW and 2 GW, by the end of 2014.

Shipment by Region (%)

The table above shows the major shipping countries for Hanwha Solar. Shipments to Europe and Africa regions amounted to 12% of the total module shipments, Asia Pacific accounted for 70% and North America 18%. The shipments to Japan have increased and those to UK have significantly declined. The reason for a decrease in UK shipments is because of lower demand for utility-scale solar projects, due to a change in the incentive scheme. The shipments to China were approximately 6% of the total shipments in Q2 2014. The company remains hopeful of maintaining continuous relations with China in the forthcoming quarters too. Hanwha Solar is also making an effort to enter the emerging markets like Turkey.

I see a strong potential for the company in years to come and would recommend the investors to buy the stock. The company is cheap with P/S of 0.3x and P/B of 0.8x. The stock is currently trading at $ 2.48. The company definitely deserves to be a part of one’s solar portfolio.